Ontario is implementing a new regulatory regime to allow private internet gambling operators to do business in the province upon registration with the provincial government. However, there are concerns that the province may be breaking the law and encouraging operators to violate the Criminal Code of Canada.
The Criminal Code of Canada prohibits gaming and betting unless under certain exceptions. One exception allows provincial governments to “conduct and manage” gaming and betting activities. The interpretation of “conduct and manage” is not clear, but indicators include strategic decision-making, ownership of infrastructure and intellectual property, operational control, game selection and rules, control over funds, and retention of profits.
The province’s proposed “iGaming Model” does not appear to meet these indicators as private operators would be responsible for key aspects such as strategic decision-making, investment, ownership, game selection, and profit retention. The Alcohol and Gaming Commission of Ontario (AGCO) would provide oversight through a subsidiary called iGaming Ontario, but it seems that neither the AGCO nor iGaming Ontario would be involved in developing, marketing, or operating the gambling websites.
A licensing regime would be more practical and desirable for regulating internet gambling, as seen in successful jurisdictions like the UK, the Netherlands, and Denmark. However, the province’s model attempts to shift business risk and decision-making to private operators while claiming to still conduct and manage the activities.
This legal uncertainty poses risks for both the province and private operators. Residents of Ontario spend nearly CAD$1bn annually on online gambling, with around 70% going to grey market websites. A licensing regime would not only reduce the grey market but also enable the implementation of policies to address gaming-related harms.
The province should engage with the federal government to create an effective and constitutional regulatory regime, as the proposed model is scheduled to launch soon. Acting within the confines of the law is essential, and the province should have lobbied for amendments to the Criminal Code earlier.
Ron Segev, a leading gaming lawyer, highlights the province’s efforts in creating a regulatory framework and incorporating stakeholder feedback. However, the province’s legal framework is outdated for the internet era.
Overall, the province needs to find a way to liberalize its online gambling market while complying with the law and ensuring clarity and legality.
